SPRINGFIELD (August 3, 2004) Sales of existing single-family homes for the second quarter of 2004 signaled the best quarter on record capping five consecutive months worth of increases, according to the Capital Area Association of REALTORS®.

Home sales during the second quarter of 2004 exceeded the prior year’s record-setting second quarter by 3.3 percent with 1,102 homes sold as compared to 1,067 homes sold during the same period of 2003.

Rick Hanselman, CAAR President, was not surprised by the housing market’s recent performance. “In part, the record results from a natural 'fence-jumping' by buyers getting into the market after mortgage interest rates began to rise at a sharper clip this Spring," he said. "This may be the last peak in home sales for a while and existing-home sales are likely to be slower during the second half of the year. Even so, fundamentals are still very favorable for a strong second half of 2004 setting us up for another record."

The median sale price of a home during the second quarter of 2004 was $95,000 reflecting a modest increase of 2.6 percent over the 2004 median sale price of $97,500. Total home sales volume for the second quarter of 2004 reached $128.0 million reflecting a 6.6 percent increase from the previous year.

Hanselman said he expects the local median sale price to remain at or near the 2003 price of $92,000 while the National median price is expected to rise 6.7 percent to $181.500. “It doesn’t get any better than Springfield, Illinois. Comparatively speaking, good, descent housing in the Capital area is a bargain compared to most urban markets throughout the country.”

Hanselman said that higher interest rates are not necessarily all bad news. “Higher interest rates signal the fact that we are in a growing economy rather than succumbing to inflationary pressures,” he said. “This is good news because this points to corporate profits being up, an increase in corporate spending and strong overall job creation. In the housing market, this helps to mitigate the effects of slightly higher mortgage rates.”

The Federal Home Loan Mortgage Corp. reported that the national average commitment rate for 30-year, conventional, fixed-rate mortgages was 6.1 percent during the second quarter of 2004, up modestly from the 5.5 percent rate at this time in 2003.

Mortgage rates are expected to remain very favorable in historic terms for the forseeable future, said Hanselman. “Those that might be affected the most by a rise in financing costs are lower-income home buyers. Hopefully, this category of buyers will benefit from an improving job market that will provide the means to also afford decent housing.”

Second quarter 2004 sales of all property classes combined (i.e., commercial, industrial, farm, residential, vacant land) reveal sales of 1,222 properties during the second quarter of 2004, up 2.7 percent over the 1,189 sales reported during the same period of 2003. Total dollar volume of all real estate sold increased 5.8 percent with $137.6 million sold during the second quarter of 2004 as compared to $130.1 million during the same period last year.

The Capital Area Association of REALTORS® is the Voice for Real Estate in the Capital Area representing more than 700 members involved in all aspects of the real estate industry.

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